GM: New MPG Rules Will 'Essentially surrender the market for trucks, SUVs to Japan.'

[Perian]

Link: http://money.cnn.com/2006/12/26/news...ce=yahoo_quote

GM slams possible fuel economy changes.

Auto manufacturer says standards would place an unfair burden on Detroit and would essentially surrender the market for trucks, SUVs to Japan.

DETROIT (Reuters) -- A proposal to increase U.S. fuel economy standards would force Detroit-based automakers to "hand over" the market for trucks and sport-utility vehicles to Japanese manufacturers, a senior General Motors Corp. executive said.

Bob Lutz, GM's vice chairman and the head of the company's global product development team, said the proposed changes to the government's Corporate Average Fuel Economy (CAFE) standards would represent an unfair burden on the traditional Big Three automakers.

"For one thing, it puts us, the domestic manufacturers, at odds with the desires of most of our customers, namely larger vehicles," Lutz said in a year-end posting on a Web site maintained by GM.

He added: "That effectively hands the truck and SUV market over to the imports, particularly the Japanese, who have earned years of accumulated credits from their fleets of formerly very small cars."

Lutz, a long-time critic of government fuel economy regulations, compared the attempt to force carmakers to sell smaller vehicles to "fighting the nation's obesity problem by forcing clothing manufacturers to sell garments only in small sizes."

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Link: http://fastlane.gmblogs.com/archives...ting.html#more

By Bob Lutz
GM Vice Chairman

Hello, everyone. The original purpose of the post was to send the warmest of season’s greetings to all of you, and wish you a happy and healthy 2007. But, as usual, there’s more on my mind than that.

So while the holiday greetings from us to you are first and foremost and sincere, I also feel the need to comment on recent talk centering on possible revisions to the government’s Corporate Average Fuel Economy (CAFE) standards. There is now a team of "independent CEOs", most of them in the transportation business, that has recommended a 4% per year increase in the standard.

My feelings on CAFE are well-known; I’m the guy on record who compared forcing automakers to sell smaller cars to improve fuel economy with fighting the nation’s obesity problem by forcing clothing manufacturers to sell garments in only small sizes.

So it’s no surprise to most that I fail to see the wisdom, or the fairness, in this particular recommendation. For one thing, it puts us, the domestic manufacturers, at odds with the desires of most of our customers, namely larger vehicles that we wouldn’t be able to supply in the numbers needed.

That effectively hands the truck and SUV market over to the imports, particularly the Japanese, who have earned years of accumulated credits from their fleets of formerly very small cars. They can afford to go bigger, which they’re doing now by the way, and they’d be able to move up and fill the segments we’d be forced to vacate.

There is no technological bag of tricks that enables much better fuel economy than we have today. We already have maximum aerodynamics, active fuel management, six-speed transmissions, electric power steering, direct injection, and hundreds of dollars (per vehicle) of other technology that saves a tenth of a mile per gallon here, two-tenths there. Despite what alarmists may think, we don’t have any magic 100-mpg carburetor that we’re holding back because we’re in bed with the oil companies.

We are working daily toward real alternative fuel solutions to reduce our dependence on petroleum, using the most advanced technologies available, and some that haven’t even been invented yet. Stay tuned for the North American International Auto Show in Detroit in January to hear more of what we’ve been up to in this area.

In the meantime, and I’ve said it before, the most effective way to drive market behavior is through the market mechanism; we saw the quick move to smaller vehicles when gas hit $3-plus recently. While we aren’t advocating higher fuel prices, we have to face it: The reason Europeans drive very small cars is that gasoline costs so much more. That’s what the market demands there, and that’s what we provide.

Higher gas prices have done dramatically more to reshape consumer buying trends than any regulation. As long as it's around $2/gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all. Forcing us to alter the fleets to hit some theoretical average won’t change what consumers want, or what they’ll buy.

The real way to save fuel is the widespread adoption of bio-fuels, produced domestically, like E-85 ethanol (GM is the world's largest producer of cars and trucks capable of running on domestically produced bio-fuels) and the pursuit of the electrification of the automobile, as announced by Rick Wagoner in L.A. recently, such as in plug-in hybrids, fuel cell electric cars and other electrical technologies. The Japanese government is spending huge amounts on advanced battery research. It would be nice if our government would do the same.

[Perian]

Is this the new face of GM - "The government made us #2"?

GM had the same marketplace opportunities as the imports; the $10K profit on each GMT800 was just simply too much to resist; thus the Cobalt and other fuel efficient vehicles were delayed for years. The imports, as we now know, took another route.


Mr. Lutz: With all due respect, you must be kidding.

.

[asim]

Yeah, I saw this yesterday.

I don't know too much on the topic of EPA milage regulations, but from what I read in this CNN article, it doesn't seem very good. If Lutz is telling the truth (which he does anyways) then the domestics are pretty screwed. Leaving the market up for grabs to the imports is just a big no-no, and should not happen. This sucks.

[GM-Joe]

I think the government should push all manufacturers to decrease their product's energy use, but to give credits because one does not have large vehicles is wrong. That will only give an advantage to the Japanese to make more 15mpg Sequia's, 18mpg Tundra's, and 20mpg Ridgeline's which is not what we need; we need every damn auto company to continually improve fuel economy and GM is not excluded.

Don't let Toyoda put out a 375hp Tundra that gets 16mpg with 5mpg credit, that is unfair market and will hurt the consumer in the long run.

GM is making some small progress and hopefully the hybrid developed with BMW and DX will push that envelope even farther.

[unkillsam]

Originally Posted by Perian

Is this the new face of GM - "The government made us #2"?

GM had the same marketplace opportunities as the imports; the $10K profit on each GMT800 was just simply too much to resist; thus the Cobalt and other fuel efficient vehicles were delayed for years. The imports, as we now know, took another route.


Mr. Lutz: With all due respect, you must be kidding.

.

The point he is trying to make is that the goverment would force GM to produce less trucks to make CAFE requirements while allowing Toyota to make as many as they want because the government would give them credit for all the Corrola's and such already on the road.

First off, it's totally assinine because GM trucks in general get better fuel economy then Toyota trucks. Secondly, if the government feels it necessary to raise CAFE requirements, it should put GM and Toyota on a level playing field, giving no credits to Toyota and forcing both manufactures to improve their truck MPG's.

[Geotpf]

One thing I would be in favor of, which would accomplish some of the goals of CAFE, would be extend the gas guzzler tax to non-cars (SUVs/vans/pickups), with an exception for vehicles used for certain business trades who need such vehicles (construction, farming, etc.-but not a lawyer or realtor, for example). Of course, that would hurt the domestics a lot, because they need those sales, having stopped making any profit on cars or smaller SUVs or pickups.

[jwrebholz]

Or you could just mandate that all full-size trucks and SUVs require a CDL to operate. Then watch the numbers of them on the road plummet as people shift to vehicles more in line to serve their actual needs. It'd cut down on auto accidents a great deal as well, considering how many of these are caused by idiots in SUVs who don't know how to handle them.

[goblue]

Originally Posted by ARTICLE

The Japanese government is spending huge amounts on advanced battery research. It would be nice if our government would do the same.

Here is the crux of my problem with our government and GM. Toyota has made huge strides due to quality and other such matters, but the support of the Japanese government is also a very key factor in their profit and marketshare march.

GM doesn't need its healthcare burden assumed by the government, and it doesn't need a bunch of unsecured loans, all it needs is our government to provide an equal field for which to play on. That means stopping the currency manipulation and supporting research directly to American companies in competition with foreign companies doing the same.

[Geotpf]

Originally Posted by GM-Joe

I think the government should push all manufacturers to decrease their product's energy use, but to give credits because one does not have large vehicles is wrong. That will only give an advantage to the Japanese to make more 15mpg Sequia's, 18mpg Tundra's, and 20mpg Ridgeline's which is not what we need; we need every damn auto company to continually improve fuel economy and GM is not excluded.

Don't let Toyoda put out a 375hp Tundra that gets 16mpg with 5mpg credit, that is unfair market and will hurt the consumer in the long run.

GM is making some small progress and hopefully the hybrid developed with BMW and DX will push that envelope even farther.

There are four CAFE categories:

Domestic made truck/SUV/van
Domestic made car
Foreign made truck/SUV/van
Foreign made car

I believe you have to be above the CAFE in all four categories (or not make any vehicles in such categories) to avoid a fine. Mexican and Canadian made vehicles count as "domestic", due to NAFTA. The truck CAFE is lower than the car CAFE.

So, a Prius doesn't help out the Sequoia's poor mileage (different categories-foreign made car, domestic made truck). Neither do the high-mileage RAV4 or Highlander Hybrid (both foreign made-although there's a plant under construction in Canada that will eventually make RAV4s). But the Tacoma and Sienna do.

[racy]

Originally Posted by Perian

Is this the new face of GM - "The government made us #2"?

GM had the same marketplace opportunities as the imports; the $10K profit on each GMT800 was just simply too much to resist; thus the Cobalt and other fuel efficient vehicles were delayed for years. The imports, as we now know, took another route.


Mr. Lutz: With all due respect, you must be kidding.

.

I couldn't agree more. I wish this article had not been posted - it is embarrassing. It shows GM's stubbornness to take responsibility for their own mistakes and innactions. It also demonstrates GM leadership's lack of insight and foresight. Yuck. Big, fat Yuck.

Just when I start feeling good about GM again, an article like this surfaces.

[mikesright]

Originally Posted by Perian

Is this the new face of GM - "The government made us #2"?

GM had the same marketplace opportunities as the imports; the $10K profit on each GMT800 was just simply too much to resist; thus the Cobalt and other fuel efficient vehicles were delayed for years. The imports, as we now know, took another route.


Mr. Lutz: With all due respect, you must be kidding.

.

Ok Perian, we get it. GM formerly did not really care too much about the smaller end of the market a few years back. I think with the newest smaller cars coming out GM is really attacking that market now, even if the sales aren't there yet.

I don't really think that the proposed legislation is fair to GM, as they would have to stop selling as much SUV's simply because one of their strengths is as a truck maker, and not as a small-car specialist. He believes in higher gasoline taxes and development of alternative fuels and technologies to get gas eventually out of the automobile.

I think we all know that GM has been aggressive to get new technologies out to save fuel, either that or GM will eventually be overtaken. Guess what, they have! AFM, 2Mode, Plug-in 2Mode, Fuel Cell Dev, e85 and e100 tech, di, 6 speeds, etc, are huge priorities for them, and are aggressively being implemented. With many of these technologies, and some incentives, mandates, and certain taxes, the federal government can easily switch us over time to vehicles that are out of the equation of national security or the enviornmental debate. I think that would be better than removing marketplace choice or irrepairably damaging companies, don't you think?

Already with the marketplace moving to smaller vehicles b/c of gas prices it is evident if a company does not have the smaller marketplace covered with good products it puts that company at a competitive disadvantage. I don't think Detroit needs any more prodding, they see the writing on the wall, for gosh sakes!

[unkillsam]

Originally Posted by Geotpf

There are four CAFE categories:

Domestic made truck/SUV/van
Domestic made car
Foreign made truck/SUV/van
Foreign made car

I believe you have to be above the CAFE in all four categories (or not make any vehicles in such categories) to avoid a fine. Mexican and Canadian made vehicles count as "domestic", due to NAFTA. The truck CAFE is lower than the car CAFE.

So, a Prius doesn't help out the Sequoia's poor mileage (different categories-foreign made car, domestic made truck). Neither do the high-mileage RAV4 or Highlander Hybrid (both foreign made-although there's a plant under construction in Canada that will eventually make RAV4s). But the Tacoma and Sienna do.

You are missing the point. GM has better truck CAFE numbers (well at least full-size truck and SUV) then Toyota numbers. This proposed legislation would force GM to achive even higher CAFE numbers while allowing Toyota to stay the same by using their CAFE credits.

[Shotgun]

Increases in fuel economy are usually met by all manufacturers with disdain and contempt. Probably because big oil and auto companies are all in cahoots together! They both know it's about supply and demand! If gas went to $5/gallon, people would still be buying it for their suvs, trucks, etc...it'd just hurt the wallet a little more.

[FoMoCo Fan]

If GM built a decent, fuel efficent small car that people actually weren't embarrased to be seen in, this wouldn't be an issue. This wouldn't be an issue if GM had invested in fuel efficent small car technology, instead of investing in the HUMMER brand. You reap what you so. Of course Lutz hates CAFE rules, because GM's sales largely consist of large fuel inefficent vehicles, where with other automakers from overseas, such vehicles are only a small percentage of their overall sales. GM says this hurts them, and GM is right it does hurt them. But it IS NOT the EPA's fault that GM has basically become a truck company with cars on the side. GM did that to themselves by being incompetent for SOOOOO many years. Live with it GM.

[GM-Joe]

Originally Posted by Perian

Is this the new face of GM - "The government made us #2"?

Our government is killing manufacturing in this country.

Back 20 years ago, the Japanese competitors had little product, few models, yet had pure profit. When their govenment keeps their currency low, it is like trying to compete against someone with a 20% advantage.

Toyoda does the same today with Lexus, Lexus is pure profit. The Camry is not a money maker, but it feeds the others.

I am not surprised, it's just basic economics; whoever has the advantage long enough wins.